I purchased agricultural land in rural area in 3 years back. I sold it now with gain of Rs.10 Lakh. Gain is exempted under Capital Gain tax because it is not a capital asset.There is no section under Income from other sources to charge tax it.
It is not in the list of exempted income u/s 10 etc.
Now my query is that whether the Gain is taxable income or not.
Please advise.
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Gain on agricultural land sold
Replies (9)
Quick Summary
Sale of land can result in two kinds of incomes. If the land is held as stock in trade then the sale of such lands results in business income.Whereas, if the land is held as investment then the income on the sale of the land results in Capital Gain.
Rural Agricultural Land: A Rural Agricultural Land does not qualify to be a capital asset, hence no capital gains/loss arise on sale or transfer of Rural Agricultural Land.
Rural Agricultural Land: A Rural Agricultural Land does not qualify to be a capital asset, hence no capital gains/loss arise on sale or transfer of Rural Agricultural Land.
Gain is not taxable because rural agricultural land is a not a capital asset.
Gain is not in the list of Tax free Income u/s 10,10A,10B,10BA and 13A. So how will it be Tax free?
Section 45 is the charging section for capital assets and since rural agricultural land is not at all a capital asset as per section 2(14), no specific exemption has been provided u/s 10 I think.
Other views, if any, are welcome.
Agreed on the point that the gain of said nature are mentioned in the list u/s 10.
But if something has to be taxed under the head capital gain then there has to be a
" transfer of capital asset". Unless these criterions are satisfied one cannot tax such income under the head of capital gain.
In the given case, rural agricultural land itself is not considered as a "capital asset" which is one of the criteria. Though there is a transfer, it is not a transfer of capital asset. For understanding purpose one can say it is transfer of other than capital asset. Hence the charging section is not invoked. So it is not taxable under the head capital gains
typo error " are not mentioned in the list u/s 10"
Yes rural agriculture land is exempt u/s charging sec 45 of capital gains
Check, it's not near the local authority. Check the conditions 1st
Agricultural land is situated in Panchayat area being distance by 15 km from nearest municipality
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